Case Studies in Aboriginal Business

The Purdy Crawford Chair in Aboriginal Business Studies was established at Cape Breton University in 2010 in response to Aboriginal community leaders’ expression of the need for entrepreneurship, business investment, and corporate skills training for the purpose of creating a model of self-reliance.

Named in honour of Canadian lawyer and corporate boardroom leader, the late Mr. Purdy Crawford, the Chair aims to promote interest among Canada’s Aboriginal people in the study of business at the post-secondary level.

The Purdy Crawford Chair in Aboriginal Business Studies focuses its work in four areas:

• Research on what “drives” success in Aboriginal Business• National student recruitment in the area of post-secondary

Aboriginal business education• Enhancement of the post-secondary Aboriginal business curriculum• Mentorship at high school and post-secondary levels

“ Meaningful self-government and economic self-sufficiency provide the cornerstone of sustainable communities. My wish is to enhance First Nations post-secondary education and research to allow for the promotion and development of national Aboriginal business practices and enterprises.”

Purdy Crawford, C. C. (1931-2014)

Purdy Crawford Chair in Aboriginal Business Studies

Shannon School of BusinessCape Breton University

1250 Grand Lake Rd, Box 5300Sydney, NS B1P 6L2

©2015

www.cbu.ca/crawford

New Afton Mine by Angelique Slade Shantz 1

STK'EMLUPSEMC TE SECWEPEMC NATION AND THE NEW AFTON MINE

Times have changed. When the original Afton mine, a cluster of four open pits owned by Teck Resources, was developed in the late1970s, mineral projects were often constructed, operated, and closed without much consideration of, let alone negotiation with, local communities. Since the Afton mine shut its doors in the mid-1990s due to low copper prices, and the property was purchased by New Gold, a new era of partnership with nearby First Nations is increasingly the industry norm. For the New Afton mine, this means a close collaboration between Tk'emlups te Secwepemc and Skeetchestn Indian Band, the two First Nations whose traditional territory the New Afton mine is located on, and New Gold, the mining company that now owns the New Afton mine. The 1000-member Tk’emlups te Secwepemc (formerly the Kamloops Indian Band), has a 33,000 acre reserve adjacent to the city of Kamloops. The band boasts impressive accomplishments in both education and economic development, with the Sk’elep School of Excellence, a K-7 school with a strong Secwepemc cultural component, and eight corporations in industries spanning mining, ranching, forestry, and real estate. The Skeetchestn Indian Band has 500 members living both on and off the 4,500 acre reserve near the town of Savona. Leaders in both education and renewable energy, Skeetchestn’s Quiq'wi'elst (Blackstone) School features a state of the art green design that incorporates both passive and active energy saving technologies, including a geothermal ground source heat pump that warms the classrooms through the winter, supplemented by natural gas when necessary. This clean energy focus has been spread throughout the community, and the band has since retrofitted many of its community buildings with energy efficiency technologies (AANDC, 2010). In addition, the Knucwentwecw Development Corporation, the band’s economic development corporation, manages several economic ventures. STK'EMLUPSEMC TE SECWEPEMC NATION Both bands have similar long-term sustainability and self-sufficiency visions, and are historically united by a common language and similar culture (ABIC, n.d.). When the time came to begin negotiations with New Gold, rather than negotiate two separate agreements, the two bands came together in 2007 to form the Stk'emlupsemc te Secwepemc Nation (SSN). Ratified by a Resource Sharing Protocol MOU, this joining of forces created a united front to manage the broader collective interests of the two Bands’ shared territory. They now work together to leverage resource sector opportunities for the socioeconomic benefit of their people, with the jointly held Stk’emlupsemc Enterprises

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Inc (SEI) as the economic development vehicle that works on behalf of their interests (ABIC, n.d.). THE NEW AFTON PARTICIPATION AGREEMENT The Participation Agreement that was signed by SSN and New Gold in 2008 formalizes the partnership between the parties in relation to the New Afton mine. The New Afton mine is located on the site of the former open-pit Afton mine, 10km west of Kamloops, and is an underground block cave mine that is expected to produce 75 million pounds of copper and 85,000 ounces of gold annually over its twelve year mine life, with capital costs estimated at $760 million (SNL Financial, 2015). The Participation Agreement includes employment, education and training stipulations, environmental principles, business and contract opportunities (also known as local content), and financial considerations, including a revenue sharing arrangement of 2 per cent of net smelter revenues for SSN and its members in exchange for consent and continued support of the project (Dolha, 2013). One roadblock the partnership hit was related to the employment stipulation in the Agreement. While the Participation Agreement indicated preferential employment of SSN members, New Gold had a Grade 12 minimum education requirement that few SSN members met. Also challenging was the lack of community members with underground mining skills (ABIC, n.d.). To meet these challenges, New Gold found alternate measures to assess potential employment candidates, and in collaboration with the BC Aboriginal Mentoring and Training Association (AMTA) developed an Underground Miner Training Program, complete with a heavy equipment simulator. Although this $10 million program has since been closed, the collaboration played a key role in helping to train the local workforce, and almost a quarter of New Afton employees are Aboriginal (Laing-Gahr, 2013). Equally important as these up-front considerations is the maintenance of the partnership. The Participation Agreement is a dynamic framework for continuous communication protocols and venues (see Exhibit 1). Three years after signing the Participation Agreement, both parties came together to review and amend it, a process which evolved into an annual gap analysis whereby the agreement is reviewed and gaps where either party are not complying with parts of the agreement are identified, and any necessary modifications are made (ABIC, n.d.). This annual gap analysis is further evidence of the non-static nature of a partnership, and supports the idea that an emphasis on communication avenues and a dynamic approach to a “living” agreement is an important asset to a resource relationship.

New Afton Mine by Angelique Slade Shantz 3

ECONOMIC AND COMMUNITY DEVELOPMENT AGREEMENT An additional unique feature of this partnership is the participation of the province. In 2010, SSN signed the first Economic and Community Development Agreement (ECDA) in British Columbia (Government of British Columbia, n.d.). ECDAs are agreements between the Province and First Nations to share the direct mineral tax revenue on new mines and major mine expansions, and the province had signed nine more ECDAs by early 2015. The province will share 37.5 percent of the mining tax revenue from the New Afton mine with the Tk'emlups First Nation and the Skeetchestn First Nation (Government of British Columbia, n.d.). The mine started production in 2011, and in November of 2013 the SSN received its first dividend payment from taxation of $730,000 (Dolha, 2013). It is estimated that the revenue-sharing deal will generate $30 million dollars in total for the bands to share (ABIC, n.d.). PLANNING FOR AN UNCERTAIN FUTURE With resources flowing in and a planned expansion announced in 2014, the future looks bright for SSN. However, both bands understand that the mine won’t last forever (ABIC, n.d.), and although an extension of the mine’s 12 year life is under discussion, the volatility of mineral prices could close the mine’s doors at any moment, as was the case with the original Afton mine. The Bands’ leaders are taking this threat as an opportunity, and are looking carefully at long-term sustainability as a major criteria for how they invest the returns in a way that will last after the mine is gone (ABIC, n.d.). For example, Skeetchestn is using the resources not only to bolster education and health spending, but also to leverage highway frontage lands designated for commercial purposes and the development of band-owned businesses that are not necessarily reliant on the mine and its employees as a primary source of contracts and customers (ABIC, n.d.). Although New Gold is legally responsible for reclaiming the land in an environmental sense, the socioeconomic legacy it leaves is far more complex and difficult to measure, monitor, and be held accountable for. Time will tell if the strong Partnership Agreement, goodwill from both parties, and forward-thinking leadership will be enough to sustain the benefits SSN is receiving to create a thriving and resilient local economy long after the mine’s doors have closed.

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QUESTIONS FOR DISCUSSION

1. What are some of the considerations that the SSN leadership should be taking into account to plan for a “thriving and resilient local economy long after the mine’s doors have closed”?

2. If you were a member of the SSN leadership, how would you consider investing the sizeable but short term resources that New Afton is providing? Would you invest it in businesses that will support the mine and thrive in the short term? Or invest in longer term opportunities, such as education or infrastructure that will not necessarily capitalize on the business or contracts that the mine provides?

3. Given that New Gold’s leadership claims that it wants to provide lasting, sustainable socioeconomic benefits to its partner communities, what are some of the issues, for example related to training, local content provisions, or other items in the Participation Agreement, that it could focus on to ensure this?

4. Given that Participation Agreements or Impact Benefit Agreements are bilateral contracts between two parties, they are confidential. Should they be, given that communities could learn much from other communities who have signed similar agreements either with the same or a different firm? Should the Provincial or Federal government be involved?

5. In particular, since the British Columbia provincial government is now sharing its tax royalties with First Nations in the form of ECDAs, should it be more involved in the partnership between New Gold and SSN?

New Afton Mine by Angelique Slade Shantz 5

EXHIBIT 1 SSN and New Gold Participation Agreement Communication Venues

Venue Participants Frequency Cause/Content Joint Implementation Committee

Two reps from New Afton, a rep from each of the bands and the Environmental Manager from the New Afton site

Monthly Ensures both parties are abiding by Agreement commitments. If a specific issue or problem arises, it is brought forward to the JIC meeting to be discussed and a resolution sought. Most issues are resolved at this level.

SSN Executive Band councilors from each band, the General Manager from New Afton and the New Afton FN Coordinator

Bi-monthly Updates are discussed and any outstanding issues are resolved.

Chief’s Table Chiefs of Tk'emlups and Skeetchestn and New Gold’s CEO

Quarterly General information sharing

Environmental Monitoring Board

Environmental reps from each Band, the Environmental Manager from New Afton and representatives from the Ministry of Environment and the Ministry of Mines

Quarterly SSN can pose questions or concerns with an environmental regulator present. If work being done on site will cause a land disturbance, it is communicated to the SSN and an elder or traditional knowledge keeper is delegated to carry out the proper cultural protocol or ceremony prior to commencement of work.

Elders Meeting Elders and appropriate mine site representatives

Annually Alternates between a community meeting and a mine site visit, including surface site tour, and luncheon.

Youth Update and Tour

Youth and appropriate mine site representatives

Annually Opportunity for youth to ask questions and job shadow.

Source: Adapted from Aboriginal Business & Investment Council (n.d.)

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SOURCES Aboriginal Business & Investment Council. (n.d.). Tk'emlups Indian Band, The Skeetchestn Band And New Gold's New Afton Mine Project. http://www.bcabic.ca/content/tkemlups-indian-band-skeetchestn-band-and-new- golds-new-afton-mine-project, accessed February 21, 2015. Aboriginal Affairs and Northern Development Canada. (2010). Sharing Knowledge for a Better Future: Adaptation and Clean Energy Experiences in a Changing Climate. https://www.aadnc-aandc.gc.ca/ eng/1312222759090/1312222864232, accessed February 21, 2015. Dolha, L. (2013). First nations reap benefits from gold mine. First Nations Drum. http://www.firstnationsdrum.com/2013/11/first-nations-reap-benefits-from-gold- mine/, accessed February 21, 2015. Government of British Columbia. (n.d.) “Tk’emlups te Secwepemc (Kamloops Indian Band) Economic and Community Development Agreements.” Economic and Community Development Agreements Database. http://www2.gov.bc.ca/gov/content/environment/natural-resource- stewardship/consulting-with-first-nations/first-nations-negotiations/first-nations-a- z-listing/tk-eml-ps-te-secwepemc-kamloops-indian-band, accessed January 24, 2015. Laing-Gahr, T. (2013). New Gold, New Afton, new approach. Canadian Mining Journal. http://www.canadianminingjournal.com/news/new-gold-new-afton-new- approach/1002568904/, accessed January 9, 2015. SNL Financial. (2015). Mining Property Briefing Books: Afton Mine Property Profile. SNL Metals & Mining Online Database. http://www.snl.com/Sectors/MetalsMining/MiningProjectBriefingBooks.aspx, accessed January 15, 2015.